Israeli Cabinet Weighs Committee Proposals on Taxes, Prices

Oct. 3 (Bloomberg) -- Israel’s Cabinet is discussing the
recommendations of a government panel that proposed raising
taxes on companies and on individuals who earn more than about
$130,000 a year and may vote as early as today.

The panel, appointed by Prime Minister Benjamin Netanyahu
in response to protests over the cost of living, proposed that
corporate taxes be increased to 25 percent next year and 26
percent in 2013 from 24 percent this year. It said the top rate
of personal income tax should be raised to 48 percent, and that
the country must increase its stock of affordable housing and
open its markets to more imports.

The recommendations “will allow us to do necessary
repairs, but in a responsible manner,” Netanyahu told the
Cabinet in Jerusalem today, in remarks broadcast on Army Radio.

Netanyahu tapped the panel, led by economist Manuel
Trajtenberg, to come up with proposals after mass street
protests across the country calling for lower prices and more
affordable housing.

The proposed tax increases would raise 30 billion shekels
($8 billion) over five years, and the money should mostly be
spent on education, the panel said when it presented its
recommendations on Sept. 26. It also proposed cuts to the
defense budget.

The Trajtenberg report has been criticized by ministers
from two parties in Netanyahu’s Likud-led ruling coalition,
Foreign Minister Avigdor Liberman’s Yisrael Beitenu and the
religious Shas faction.

‘Real Solutions’

“I don’t see here any real solutions to the problem of
poverty in Israel,” Minister of Tourism Stas Misezhnikov of
Yisrael Beitenu told Army Radio before the Cabinet meeting.
“This won’t solve the housing problem, won’t solve the problem
of indirect taxes and won’t bring funds flowing into the
Education Ministry.”

Misezhnikov also said ministers should be given more time
to examine the report before possibly voting on it today.